BNP Paribas announced today that it has secured a licence from Standard & Poor’s to create derivative products linked to the S&P Hedge Fund Index.
The French bank intends to provide a variety of derivative products linked to the S&P Hedge Fund Index that could include principal protected notes, swaps and options that will be available to investors worldwide. BNP Paribas expects products and liquidity to be available by early 2003.
“The S&P Hedge Fund Index provides us with an innovative asset on which to base derivative products that will add a new dimension to the S&P Hedge Fund Index products created by PlusFunds,” says Stephane Liot, Global Head of Fund Derivatives at BNP Paribas. “The pricing characteristics possessed by S&P Hedge Fund Index should enable us to provide daily liquidity under normal conditions, which is unprecedented for any hedge fund product. In addition, the daily transparency offered by the index provides us, and in turn our clients, with the ability to track better what drives hedge fund returns and identify the risks in investing in this alternative asset class.”
Steven Oyer, Vice President, Standard & Poor’s, added: “One of Standard & Poor’s objectives in creating the S&P Hedge Fund Index was to provide an index that could form the basis for a number of investable products that would offer investors exposure to the hedge fund universe. We are delighted with the interest we have received worldwide for licences and products based on the index and we think products like BNP Paribas’ will offer opportunities for increased institutional and retail involvement in the hedge fund marketplace.”